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158 Fighting the Diseases of Poverty
As such, these general institutional failures greatly reduce the
incentives to develop new medicines, especially for diseases that
primarily affect the poor. In addition, there are several specific issues
in the institutions of many poorer countries that negatively affect
incentives to develop new medicines.
Weak intellectual property legislation in low and middleincome
countries
Some have claimed that patents create a barrier to access to medicines
by increasing prices. While this is theoretically plausible, this
scenario still does not explain the low rate of access to medicines
that are already off patent and thus open to competitive, genericbased
production.
It is true that when a state grants a patent, it provides the
inventor with temporary exclusivity over the patent product or
process. This can incur real costs, including the possibility to keep
prices artificially high when, in absence of legal protection, market
forces would drive prices down to their marginal cost – the lowest
price at which a good can be sold without the producer making a
loss. However, as Amir Attaran has shown, more than 98 per cent of
drugs on the WHO’s ‘Essential Medicines’ list are not patented in
any poor country. As we have also illustrated, there are many factors
that conspire against access, but patents on these specific medicines
are not one of them (Attaran, 2004). In any case, these criticisms of
patent protection must also be weighed against their benefits.
When it comes to creating incentives to encourage the development
of new medicines for the diseases of poverty, protection of
intellectual property (IP) can play a crucially important role. The
high cost of developing a new pharmaceutical product (estimated at
upwards of $500 million in the US) (DiMasi et al., 2003), combined
with the relatively low cost of copying the same product (typically
a few millions of dollars), means that developers must be assured
that they ‘own’ the product before they will commit such substantial
sums.
Patents stimulate competition in several important ways that